California Energy Commission Case No: A.12-11-009 DOCKETED Exhibit No: A4NR-1 13-IEP-1J Witness: John Geesman TN 71511 JUL 02 2013 Application of Pacific Gas and Electric ) Company for Authority, Among Other Things, ) to Increase Rates and Charges for Electric and ) Application 12-11-009 Gas Service Effective on January 1, 2014. ) (Filed November 15, 2012) (U 39 M) ) __________________________________________ ) ) And Related Matter. ) Investigation 13-03-007 __________________________________________) PREPARED REBUTTAL TESTIMONY OF JOHN GEESMAN ON BEHALF OF THE ALLIANCE FOR NUCLEAR RESPONSIBILITY BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA JUNE 28, 2013 TABLE OF CONTENTS I. PURPOSE OF THIS TESTIMONY……………………………………………………………………2 II. PG&E’s REFUSAL TO APPLY LICENSE-REQUIRED TESTS TO NEW SEISMIC INFORMATION……………..…………………………………………………………………………….4 III. PG&E’s INTERNAL EMAILS …………………………………………………………………………6 IV. SIGNIFICANCE OF MORE CONSERVATIVE DAMPING ASSUMPTIONS………………………….………………………………………………………………..8 V. NRC STAFF’S DETERMINATION OF LICENSE VIOLATION ……………………………10 VI. PECULIAR COMMENTS FROM NEW NRC BRANCH CHIEF ……………………......13 VII. WITHDRAWAL OF PG&E’s LAR; DDE ANALYSES DEFERRED TO 2015…….…………………………………………………………………………………………………..15 VIII. NRC ENFORCEMENT FORBEARANCE = DE FACTO LICENSE AMENDMENT? ...........…………………………………………………………………………....19 IX. SELECTING THE WRONG LEVEL SSHAC ..…………………………………………………..22 X. PACKING THE SSHAC WITH PG&E INSIDERS................................................23 XI. OPENLY EMBRACING COGNITIVE BIAS........................................................24 XII. SCALING BACK THE SSHAC...........................................................................27 XIII. CPUC HAS TO START SOMEWHERE..............................................................33 i REBUTTAL TESTIMONY OF JOHN GEESMAN, ATTORNEY FOR ALLIANCE FOR NUCLEAR RESPONSIBILITY (“A4NR”) Q: Please state your name and business address for the record. A: My name is John Geesman, and my business address is: Dickson Geesman LLP, 1999 Harrison Street, Suite 2000, Oakland, CA 94612. Q: Are your professional qualifications included in your testimony? A: Yes, my professional qualifications are contained in Appendix A to my testimony. Q: Was your testimony prepared by you or under your direction? A: Yes, it was. Q: Insofar as your testimony contains material that is factual in nature, do you believe it to be correct? A: Yes, I do. Q: Insofar as your testimony contains matters of opinion or judgment, does it represent your best judgment? A: Yes, it does. Q: Does this written submittal complete your prepared testimony and professional qualifications? 1 A: Yes, it does. I. PURPOSE OF THIS TESTIMONY. The purpose of this testimony is to document, using materials recently provided by PG&E after A4NR’s successful Motion to Compel Discovery,1 the inapplicability of the “safety first” culture claims of PG&E witnesses Anthony F. Earley, Jr.2 and Christopher P. Johns3 to PG&E’s seismic assessments at Diablo Canyon. The testimony details PG&E’s response, shortly after the San Bruno explosion, to the challenge of subjecting new information about the Shoreline Fault to the demanding analytic requirements of the Diablo Canyon operating licenses. It identifies a sustained effort by PG&E to evade the most onerous of these requirements, the conservative assumptions about damping and soil-structure interaction associated with the Double Design Earthquake, culminating with an effort by PG&E shortly after the Fukushima catastrophe to simply amend the bothersome tests out of its Diablo Canyon licenses. While A4NR considers PG&E’s conduct in this matter to be profound misfeasance, the point of this testimony is not to lure the California Public Utilities Commission (“Commission” or “CPUC”) into a subject more properly regulated by the federal government under the Atomic Energy Act.4 Instead, A4NR asks the Commission to consider this example in evaluating the 1 A.12-11-009, Ruling of ALJ Thomas R. Pulsifer, May 1, 2013. 2 PG&E-1, pp. 1-1 to 1-5. Mr. Earley is Chairman of the Board, Chief Executive Officer and President of PG&E Corporation. 3 PG&E-1, pp. 2-1 to 2-7. Mr. Johns is President of Pacific Gas and Electric Company. 4 42 U.S.C. § 2011 et seq. 2 prudence of PG&E’s conduct of the seismic evaluations for which it seeks ratepayer funding in this proceeding. The Commission should quickly recognize the high stakes which California has in assuring the integrity of PG&E’s review of seismic issues at Diablo Canyon. Based on additional materials recently provided by PG&E in response to A4NR’s successful Motion to Compel Discovery, this testimony reveals the Diablo Canyon Senior Seismic Hazard Assessment Committee (“SSHAC”) – especially its ground motion characterization activities – to be an insular, corner-cutting exercise in the self-justification of past work rather than an objective, robust, scientific inquiry. Countering the overly simplistic recommendation of the Division of Ratepayer Advocates (“DRA”) to cap ratepayer funding,5 A4NR’s testimony proposes a more comprehensive remedy: establish a two-way balancing account for Nuclear Regulatory Commission (“NRC”) rulemaking expenses; provide for recovery of expenditures through PG&E’s annual ERRA filing; engage the Commission’s existing Independent Peer Review Panel in the SSHAC process; and require PG&E to record 50% of its forecast SSHAC costs below-the- line, consistent with D.11-05-018’s treatment of “advocacy” expenditures for Nuclear Energy Institute membership. Rather than rely solely on A4NR’s characterization of PG&E’s conduct, this testimony attaches each of the pertinent documents as an appendix and invites the Commission to judge for itself whether PG&E’s request constitutes a reasonable proposed expenditure of ratepayer funds. 5 DRA-11, pp. 71 – 74. 3 II. PG&E’s REFUSAL TO APPLY LICENSE-REQUIRED TESTS TO NEW SEISMIC INFORMATION. PG&E’s initial 2008 assessment that the discovery of the Shoreline Fault would have no impact on Diablo Canyon operability was based on the ground motion response spectra developed between 1984 and 1991 for its Long-Term Seismic Program (“LTSP”). This operability determination was endorsed by the NRC’s preliminary evaluation of the Shoreline Fault in April of 2009. However, the day after completion of a two-day, seismic information public workshop in San Luis Obispo on September 8 and 9, 2010, the NRC’s Senior Resident Inspector, Dr. Michael Peck, posed the question to PG&E of whether the probabilistic approach of the LTSP should be the sole method of evaluating operability or whether the Shoreline Fault information should also be compared to Diablo Canyon’s design basis as well. Significantly, two of the elements of the plant’s licensed design basis, the Design Earthquake (“DE”) and the Double Design Earthquake (“DDE”), include materially more conservative assumptions about damping and soil-structure interaction than the third element, the Hosgri Evaluation (“HE”), which was the basis for the LTSP ground motion response spectra. The magnitude of these differences is identified in the table included in Section 3.7.1.3 of Diablo Canyon’s Final Safety Analysis Report Update (“FSARU”): Type of Structure % of Critical Damping DE DDE HE Containment structures and all internal concrete structures 2.0 5.0 7.0 Other conventionally reinforced concrete structures above ground, such as shear walls or rigid frames 5.0 5.0 7.0 Welded structural steel assemblies 1.0 1.0 4.0 Bolted or riveted steel assemblies 2.0 2.0 7.0 4 Mechanical components (PG&E purchased) 2.0 2.0 4.0 Vital piping systems (except reactor coolant loop) 0.5 0.5 3.0 Reactor coolant loop 1.0 1.0 4.0 Replacement Steam Generators 2.0 4.0 4.0 Integrated Head Assembly 4.0 6.85 6.85 CRDMs (Unit 2) 3.0 4.0 4.0 Foundation rocking (containment structure only) 5.0 5.0 NA Dr. Peck’s inquiry set off a troubling chain of events which, over the next two years would include: PG&E’s unseemly efforts to avoid performing such analyses; the NRC staff’s determination that PG&E had violated its license by failing to perform the required analyses; PG&E’s attempt to amend the requirements out of its license rather than comply; PG&E’s acknowledgment in a Form 10-Q filing that failure of its license amendment strategy could result in the shutdown of Diablo Canyon; peculiar advice to PG&E from Dr. Peck’s new supervisor, Neil O’Keefe, that the utility should eliminate the DDE from the licensing basis or appear to be “covering something up”; Dr. Peck’s submission of a rare “Non-Concurrence” when NRC management allowed PG&E to avoid performing the analyses; Mr. O’Keefe’s response to the Non-Concurrence that no facts were in dispute and, despite overtones of safety, the actual questions were “procedural”; 5 PG&E’s withdrawal of its proposed license amendment after the NRC staff allowed it to delay the DDE test until completion of its post-Fukushima seismic evaluation (i.e., the current SSHAC process) in 2015; the NRC’s acknowledgment that the 2015 analyses would “most likely” show satisfying the DDE tests still to be a problem. III. PG&E’s INTERNAL EMAILS. According to Dr. Peck’s Non-Concurrence,6 the NRC concluded in September, 2010 that “an earthquake on the Shoreline Fault could produce about 70 percent greater peak ground motion [than] assumed in the DDE/safe shutdown earthquake design basis.”7 PG&E’s January, 2011 Shoreline Fault Zone report to the NRC reached the same conclusion for not only the Shoreline Fault, but also the San Luis Bay Fault and Los Osos Fault. The following excerpts from PG&E’s internal emails (with emphases added by A4NR), obtained recently as a result of A4NR’s successful Motion to Compel Discovery, provide insight into PG&E’s reaction to Dr. Peck’s September 10, 2010 question (coincidentally, the San Bruno explosion occurred on September 9, 2010):8 • Sept. 14, 2010: “This issue was raised again by Peck at 605 mtg.